The last five years have presented the property market and estate agents with some of the most challenging circumstances to overcome: Election after election, Brexit (along with its two-year execution) and its impact on the price of pound sterling, ongoing ambiguity around Capital Gains Tax changes, and increasing Stamp Duty Land Tax for overseas buyers.
Whilst there have been many reasons for homeowners to move or sell their assets, the combination of haziness about what happens next, the gamble on timing of when to move money abroad, and wavering confidence, hit property transactions hard. Then, the pandemic landed and a state of total unexpected uncertainty struck the world.
2020 saw many re-evaluate what was truly important in their lives and put worries and doubts around ‘when was the right time to move’ to the back of one’s mind. The clear priority became the importance of having a healthy, happy home with space to spread out and enjoy a safe haven from the outside world.
This mind-set spread fast, and the demand for bigger, better family homes increased, along with the desire for holiday homes – coupled with the cost of borrowing at an all-time low and household savings increasing; the drive to move has been all-consuming.
Reflections and recovery
I can now reflect on the turbulence and speed of the London property market and its performance over the year.
Property sales prices in the capital as a whole have risen by 3.3%, a positive rise but lower than some of the trending country and coastal hotspots where higher price increases have been seen; Lymington (5.1%), Oxford (8.1%) and Weybridge (7.2%). In the lettings market, some London locations saw rents drop as far as 25%, but have since recovered, and in some cases are now higher than pre-pandemic – although, the recovery was not fast enough for some landlords who opted to sell up rather than ride the storm.*
The overriding impact of the last twelve months has been a critical property shortage across both the sales and rental markets. Confidence to return to London has made a sharp U-turn and is gathering at such a rapid pace, it is outstripping the supply of available properties and simply cannot satisfy the current demand. To put this in context, in October 2021, John D Wood & Co. sold double the property volumes compared to the prior year – with an average of 30 buyers for every property available for sale, and a 27% reduction in the amount of property to sell compared to 2020.
It is important to mention that the market has suffered from a lack of overseas buyers and tenants due to quarantine restrictions, which indicates that the strength of this market has in the main been domestic, and as the travel corridors regain some normality, international demand will only serve to strengthen property prices further.
As ever the UK property market remains resilient. Most of us have never lived through a pandemic, and will have never seen a mass exodus from London at such speed. That said, some 18-24 months later, recovery is in full swing and property prices have grown, meaning that London and other popular hotspots may remain more sought after than pre-pandemic. Therefore, the question simply is; have you considered investing here yet?
Polly Ogden Duffy, Managing Director
*John D Wood & Co. data powered by ResiAnalytics